As important as credit is, there are a lot of people that don't really know that much about credit and how it can be damaged or repaired. A variety of different myths and misconceptions exist in regards to credit and credit repair, and there are a lot of people who don't even bother looking into the facts concerning this topic until it is too late and their credit has been damaged or worse.

Below you'll find some of the more common myths about credit repair, as well as the factual information that goes with them. Of course, before we get to that it's important that you understand exactly what credit is and how it works.

What Credit Is

In order to understand why many credit myths aren't true, it's important to understand exactly what credit is in the first place. At its most basic, credit is a measure of how well you have paid your loans and bills in the past. Positive experiences cause creditors to send positive reports to credit bureaus, who in turn add to your credit score; negative experiences and late payments result in negative reports which subtract from your credit score. The higher your credit score is, the better your credit and the more likely lenders are to offer you good rates on loans and credit lines.

Myth #1 - Credit Can Be Repaired Instantly

There are a number of credit repair scams that all offer you instant credit repair... unfortunately, they can cause you a variety of problems and even get you into legal trouble. These scams operate by obtaining a new tax identification number for you, usually in a manner that is legally reserved for businesses. This new number is a blank slate credit-wise, but if you use it instead of your own identification number you can be charged with fraud. Worse yet, the scammer might steal your information for identity theft.

Myth #2 - You Can't Check Your Own Credit

Many people believe that you aren't allowed to check your own credit, or if you are then it'll cost you. Many places actually allow individuals to check their credit once per year (or more) for free, so long as they do it through the appropriate government agency. Some credit monitoring services also offer free credit reports, though they require that you sign up for a trial of their service in order to do so. If not cancelled within the trial period, you will then be billed for their credit monitoring service... which can cost more than the credit report would.

Myth #3 - You Can't Fix Bad Credit

With all of the advertisement for credit repair services, there are still those who believe that truly bad credit can't be repaired. At times it may seem that way, but any credit can be repaired with time and careful repayment of your debts. As old debts are paid off and newer debts are paid on time, even the worst credit will slowly but surely begin to improve.

Myth #4 - Bankruptcy Is an Easy Way Out

Many people view bankruptcy as an easy way out of debt, which is why the penalties for filing bankruptcy are so strict. Bankruptcy should be used as a last resort only, because it can lead to years of garnished wages and not being able to use your credit. Even after the bankruptcy has been discharged you might find it nearly impossible to establish new lines of credit until years later.